Market Intel: 2015 UK watch sales

Further declines in volume sales fail to halt the continued increase in the overall market value.

Total UK market sales volumes for wrist watches declined in 2015, down 1.8%. In absolute terms this represents 167,460 less units sold than in 2014. With an average selling price in 2015 of £142 per product sold, this could have potentially led to a deficit in sales value of nearly £24m for 2015 and yet not only did the sales value not fall, they actually increased by just short of £105m in the last 12 months. The UK wrist watch market is now worth just under £1.3bn per annum as a result.

The rise in the consumers spending power over the past 5 years has seen the industry experience a 30% increase in value when comparing 2011 to 2015, with 2015 worth £290m more than the market achieved in 2011. This is despite 1.3m less units being sold when comparing the same period. From this helicopter view of the market you would be forgiven in thinking that the entry level price points in the market are experiencing a significant drop in sales and the luxury segment is driving value increases. Whilst there is truth to both of these viewpoints, things are not quite that simple.

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Starting with the luxury market, watches selling for over £1,000 experienced a 15.4% increase in sales value in 2015 and more significantly, an increase in sale volumes of 16.2%. This is performance which catches the eye as not only have the luxury brands and retailers driven the market value but they have done it by increasing the number of watches they have sold, not by increasing the average selling price. Whilst not every brand will have mirrored this trend, the overall picture suggests a certain level of price realignment and a greater focus on watches with an even more commercial focus that previously seen. Clearly, the consumer has responded accordingly.

To the complete contrast of this segment, but no less important, watches selling for under £100 did see volumes decline year on year, by just over 3%, but this was counter acted by an increase in average selling price of 7%, resulting in a value growth of 4.3% in the last 12 months.

This segment of the market is important because for day to day consumers, a luxury watch is unlikely to be their first watch and they will therefore most likely move through the price points as they grow older and their spending power increases. Therefore, the entry level price points show the potential health of the market for the longer term and while a 3% decline on the face of things doesn’t sound to damaging, in real terms this is 220,000 less units being sold in this segment in the last year.

With ever increasing threats looming from fitness trackers and smartwatches this area of the market could see further contractions in volume for 2016 as consumers potentially move away from wrist watches into more technology focused products. Consequently, brands at higher price points might have to work harder to bring these customers back to their offering later down the line.

This then would be the potential job of watches priced between £100-£500 and this price segment has been the stand out performer of the past 2-3 years, helped in part by the explosion of the sales for fashion branded products as well as strong sales from more traditional watch brands. 2015 has been less positive though with sales value in decline but nearly £2m compared to 2014 and this is despite a modest increase in volume sales of nearly 15,000 units. Clearly then, the average selling price has fallen slightly, by £2 per product sold, suggesting that there has been heavy promotional activity and or discounting within this price category. Given how well this price category has performed over the previous few years, it would seem that a reduction in average selling price, through whatever means, has not driven the consumer to purchase in significantly greater numbers to drive an increase in sales value, begging the questions, would selling less volume but at a greater price have been more valuable for all concerned?

The final sector of the market is for watches selling between £500-£1,000. This sector has always been the smallest area of the market with relatively speaking, less product and brand offering available as brands look to push their offering into the luxury sector. However, there has been significant development in the market here, especially within the last 4 months, and sales values have risen by a market leading 20% year on year and with a volume growth of 17% in the same time period. This sector might only be worth 5% of the total sales market value but continued growth rates like this over the coming 12 months could put this price point firmly on the road to even greater opportunity in the future.

It therefore becomes clear that while watches selling at under £100 have seen volumes decline, value sales are positively robust and when looking at the watches priced at over £500 and over £1,000, both volume and values are rising year on year as well. These combined price points equate to nearly 75% of the total market value but that does mean that the price point between £100-£500, worth nearly 25% of the market value, heads into 2016 on the back of declining value sales and this will need to be addressed if 2016 is to be another record year for the industry.